Bharti rings in prepaid tariff hike

New Delhi, July 22: Bharti Airtel today hiked voice and SMS tariffs by 20 per cent for prepaid users across several circles — an early signal of mobile players increasing tariffs to improve their bottomlines.

Users of Airtel’s Advantage plan will have to pay 60 paise (earlier 50 paise) per minute for local and STD mobile-to-mobile calls within the Airtel network. For mobile to landline calls, the revised tariff is 90 paise (50 paise earlier) for local and STD calls.

Users of Airtel’s Freedom plan will have to shell out 1.2 paise per second on local and long-distance calls instead of 1 paise per second earlier.

“Continuously declining margins, high 3G and BWA auction prices, constrained spectrum and rural rollout aspirations leave us with little choice but to make some price corrections,” said Bharti Airtel’s spokesperson.

Last month, Tata TeleServices had hiked SMS and STD tariffs for its new users. Analysts said most operators had been tinkering with tariffs over the last few months and the rest of the industry, including new players, would follow soon.

Bharti Airtel’s net profit for the January-March 2011 quarter stood at Rs 1,400 crore compared with Rs 2,044 crore last year, a decline of around 31 per cent as re-branding expenses and spectrum charges eroded margins.

“Call rates had hit rock bottom and had become non-sustainable in the last few years. To fight stagnant revenues and declining profitability companies had to start increasing tariffs at some point,” Romal Shetty, telecom analyst with KPMG told The Telegraph.

Telecom stocks rallied on the stock exchanges today after Bharti raised the tariffs. On the BSE, the Bharti Airtel scrip rose close to 4 per cent to finish at Rs 410.95. Idea Cellular surged 6.83 per cent to end at Rs 85.30, and Reliance Communications rose 3.43 per cent to Rs 93.55.

Telecom has been one of the laggards in the stock markets over the past many months as their profits took a beating because of cheap tariffs on account of cut-throat competition. However, recent analyst reports say the worst may be over with tariffs attaining stability and the introduction of 3G. According to an analyst, what is crucial is whether others will follow Bharti or will competition force them to hold on to their current rates.